EPA targets may be tough to hit

Smoke rises from the Colstrip Steam Electric Station, a coal-burning power plant in in Colstrip, Mont. The Supreme Court on Tuesday handed the Obama administration an important victory in its effort to reduce power plant pollution that contributes to unhealthy air in neighboring states.
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File photo/AP
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WASHINGTON – Indiana sends more carbon pollution into the air from generating electricity than nearly any other state, and that won't change under a rule the Obama administration proposed today to curb greenhouse gas emissions from power plants.

What's less clear is how difficult it will be for Indiana to make the improvements required under the rule — reducing by 20 percent the amount of carbon dioxide generated per unit of electricity by 2030.

Gov. Mike Pence has said the requirement would be devastating to Indiana and is consulting with Attorney General Greg Zoeller about how to challenge the rule in court.

The Environmental Protection Agency says rate reductions were tailored to what's doable in each state. The agency estimated Indiana could achieve nearly half of its target through energy efficiency programs that reduce the demand for electricity.

Environmental groups think Indiana and other states could be doing even more — particularly through increasing the use of wind, solar and other renewable energy sources — and will be pushing the EPA to increase the required reductions as the rule is revised over the next year.

Once the rule is finalized, states will have a year to decide how to meet the target. States can have an extra year if they want to join multistate programs, the option the EPA says is the most cost-effective way to comply.

Since the draft rule was released, states, power companies, environmental groups and others have been poring through the hundreds of pages of rules and supporting documents to figure out what they mean.

"I think everybody is still trying to get their hands around how the EPA assigned the state targets that are realistic and achievable by 2030," said Vicki Arroyo, executive director of the Georgetown Climate Center at Georgetown University.

The expectation before the rule was released was that states such as Indiana — that rely on coal-fired power plants for most of its electricity — would be hit harder than other states.

So, there was a lot of head scratching over why Indiana's 20 percent required rate reduction is the ninth smallest among states. Coal-dependent West Virginia's required reduction is eighth smallest and Kentucky's is sixth smallest.

By contrast, New York, which generated 3 percent of its energy from coal in 2012 compared with Indiana's 81 percent, has to reduce its carbon emissions rate 43 percent. Washington state's required rate reduction is 72 percent.

But those numbers don't indicate how hard it will be for states to comply.

"It's very difficult to say with any accuracy how one state compares with another," said Jeff Holmstead, a former top EPA air official under George W. Bush who represents power companies in environmental cases. "You really have to go through a very complicated exercise of modeling all of the energy resources in a state."

New York might be able to achieve its target through steps already being considered through its participation in the Regional Greenhouse Gas Initiative, an organization of nine New England and mid-Atlantic states that already has helped reduced carbon dioxide emissions by 40 percent since 2005.

EPA officials explained that Washington state's required reduction is so high because the state has only one coal-fired power plant and it is already scheduled to shut down by 2025.

"The cost to them for (complying) is going to be nowhere near the cost to Indiana," said Mark Maassel, vice president of the Indiana Energy Association, which represents electric utilities.

A main reason Indiana's reduction target isn't higher, according to analysts and an EPA senior official who spoke on condition that she not be identified by name, is the state has less ability to shift in a generation from coal to natural gas.

"They're already using their existing natural gas (plants) at a fairly high capacity factor," said Rachel Cleetus, a senior climate economist at the Union of Concerned Scientists.

So of the four methods the EPA factored into its formula to determine how much a state could reduce emissions, the agency estimated the smallest reduction for Indiana (11.5 percent) could come from increasing the use of low-emitting natural gas combined cycle plants. Combined cycle plants generate electricity from natural gas powered turbines but also use the waste heat to power steam turbines.

The next biggest reduction (16.5 percent) could come from increasing renewable energy.

And the EPA assumed the biggest reductions could be achieved by making coal plants more efficient (27 percent), and by reducing the demand for energy through energy efficiency programs (45 percent).

That would make Indiana's rate of pollution 13 percent lower in 2030 than it would be without the rule, according to the Center for Climate and Energy Solutions.

That's the fourth smallest reduction among states.

The millions of tons of carbon dioxide the EPA estimates that Indiana's plants would be sending into the air in 2030 under the rule would be the third largest among states.

A spokesman for the Indiana Department of Environmental Management said the agency isn't ready to comment on the feasibility of EPA's rule.

Jesse Kharbanda, executive director of the Hoosier Environmental Council, said none of the four strategies included in the EPA's formula to reduce emissions is foreign to Indiana.

"All of them are being pursued already," Kharbanda said. "The question is really about continuing what we're already doing over a 16-year period."

Maassel agreed that the state could be doing more in some areas, such as increasing renewable fuel or through energy efficiency programs. But there will be a cost, he said.

"All of the things the EPA thinks that the state can do are going to be expensive," Maassel said.

For example, he said, power plants have been working for years to get more electricity out of burning the same amount of coal. To make further improvements, only the most expensive measures are left. The situation is similar, he said, with the state's program to help homes and businesses use less energy.

State lawmakers voted this year to stop a 2-year-old program designed to cut energy consumption in homes, schools and businesses. The Energizing Indiana program, which will shut down in December, is funded by a fee on electricity bills. The funds pay for energy audits and weatherization programs, and provide energy-saving light bulbs and other energy-saving measures. The program was intended to reduce statewide consumption by 2 percent a year through 2019, but utilities and manufacturers said it was too expensive and the benefits questionable.

Holmstead, said there are no easy energy efficiency improvements for heavy industry, which already has a strong incentive to be as efficient as possible because power is such a big part of operating costs.

"States with a lot of energy-intensive manufacturing, those are the states that are likely to be hit hardest by the rule," he said.

But Kharbanda said there's a lot of potential for Indiana to reduce industries' large consumption of electricity from power plants by using combined heat and power technology. That allows a factory to capture the heat lost in the manufacturing process, and use it to generate power on site, decreasing the amount of power it needs to purchase from utilities covered by the regulation.

The Union of Concerned Scientists sees a greater potential for Indiana and other states to expand renewable fuels than the EPA assumed.

"In states like Indiana, that's the opportunity," Cleetus said.

Indiana generates about 3 percent of its electricity from renewable sources. Nationally, about 12 percent of electricity comes from renewable sources. The EPA estimates Indiana could hit 7 percent by 2030.

Joining with other states could make that easier to achieve, Cleetus said, because states have different abilities to tap biomass, wind, water and other renewables.

Pence argues the proposed rule will dramatically raise the state's electricity rates. His spokeswoman said that's because the rule reduces the demand for coal, which has been historically used as a cheaper energy source.

The EPA estimates that rates in the region that includes Indiana will be about 6 percent higher in 2020 than they would be without the rule. By 2030, as the cost of making energy improvements and other efficiencies begin to pay off, the increase in rates due to the rule is projected to be less than 1 percent.

"Any small price increase that we see as a result of this rule is about the price of a gallon of milk a month." EPA Administrator Gina McCarthy said. "And it's dwarfed by the huge benefits. This is an investment in better health and in a better future for our kids."